I attended Citrix’s industry analyst event a couple of weeks ago. I meant to write about Citrix right after the event but you know how things go. I got busy. But I am glad that I took a little time because it has allowed me the luxury of thinking about Citrix as a company and where they have been and where they are headed.
A little history, perhaps? To understand where Citrix is headed, a little history helps. The company was founded in 1989 by a former IBMer who was frustrated that his ideas weren’t used at Big Blue. The new company thought that it could leverage the future power of OS/2 (anyone remember that partnership between IBM and Microsoft?). Citrix actually licensed OS/2 code from Microsoft and intended to provide support for hosting OS/2 on platforms like Unix. When OS/2 failed to gain market traction, Citrix continued its partnership with Microsoft provide terminal services for both DOS and Windows. When Citrix got into financial trouble in the mid-1990s, Microsoft invested $1 million in the company. With this partnership firmly in place, Citrix was able to OEM its terminal servicer product to Microsoft which helped give the company financial stability.
The buying spree. What is interesting about Citrix is how it leveraged this position to begin buying companies that both supported its flagship business and move well beyond it. For example, in 2003 it acquired Expertcity which had two products: GoToMyPC and GoToMeeting. Both products mirrored the presentation server focus of the company and enhanced the Microsoft relationship. In a way, you could say that Citrix was ahead of the curve in buying this company when it did.
While the market saw Citrix as a stodgy presentation focused company things started to change in 2005. Citrix started to make some interesting acquisitions including NetScaler, an appliance intended to accelerate application performance, and Teros, a web application firewall. There were a slew of acquisitions in 2006. The first of the year was Reflectant, a little company in Lowell, Massachusetts that collected performance data on PCs. The company had a lot of other technology assets in the performance management area that it was anxious to put to use. Later in the year the company bought Orbital Data, a company that could optimize the delivery of applications to branch office users over wide area networks (WANs). Citrix also picked up Ardence, which provided operating system and application streaming technology for Windows and Linux.
Digging into Virtualization. Clearly, Citrix was moving deeper into the virtualization space with these acquisitions and was starting to make the transition from the perception that it was just about presentation services. But the big bombshell came last year when the company purchased XenSource for $500M in cash and stock. This acquisition moved Citrix right into the heart of the server, desktop and storage virtualization world. Combine this acquisition with the strong Microsoft partnership and suddenly Citrix has become a power in the data center and virtualization market.
The ten things I learned about Citrix. You have been very patient, so now I’ll tell you what the things I thought were most significant about Citrix’s analyst meeting.
Number One: It’s about the marketing. Citrix is pulling together the pieces and presenting them as a platform to the market. My only wish is that some company would not use the “Center” naming convention for their product line. But they have called this Delivery Center. The primary message is that Citrix will make distributed technology easier to deliver. The focus will be on provisioning, publish/subscribe, virtualization, and optimization over the network.
Number Two: Merging enterprise and consumer computing. Citrix’s strategy is to be the company that closes the gap between enterprise computing and consumer computing. CEO, Mark Templeton firmly believes that the company’s participation in both markets makes it uniquely positioned to straddle these worlds. I think that he is on to something. How can you really separate the personal computing function from applications and distributed workloads in the enterprise?
Number Three. Partnerships are a huge part of the strategy. Citrix has done an excellent job on the partnering front. It has over 6,000 channel partners. It has strong OEM agreements with HP and Dell and Microsoft. Microsoft has made it clear that it intends to leverage the Citrix partnership to take on VMWare in the market.
Number Four: Going for more. The company has a clear vision around selecting adjacent markets to deliver an end-to-end solutions. Clearly, there will be more acquisitions coming but at the same time, it will continue to leverage partnerships.
Number Five: It’s all about SaaS. Citrix has gained a lot of experience in the software as a service model over the past few years with its online division (GoToMyPC and GoToMeeting). The company will invest a lot more in the SaaS model.
Number Six. And its all about the Cloud. Just like everyone else Citrix will move into Cloud Computing. Because its NetScaler appliance is so prevalent in many SaaS environments, it believes that it has the opportunity to become a market leader. It is counting on its virtualization software, its workflow and orchestration technology to help them become a player.
Number Seven: Going for the gold. With the acquisition of XenSource combined with its other assets, Citrix can take on VMWare for supremacy in virtualization. This is clearly an ambitious goal given VMWare’s status in the market.
Number Eight. Going after the Data Center market. Citrix believes that it has the opportunity to be a key data center player. It is proposing that it can lead its data center strategy by starting with centralization through virtualization of servers, desktops, and operating systems and provide dynamic provisioning, workflow, and workload management. Citrix has an opportunity but it is a complicated and crowded market.
Number Nine: Desktop graphic virtualization. Project Apollo, Citrix’s desktop graphics virtualization project seems to be moving full steam ahead and could add substantial revenue to the bottom line over time. However, there is a lot of emerging competition in this space so Citrix will have to move fast.
Number Ten: Size matters. And speaking of revenue — Citrix is ambitious. While its revenues have topped $1 billion, it hopes to triple that number over the next few years. And then, what? Who knows.